*3.3.2 NPF*

NPF is the amount of unclaimed credit and represents the low quality of banks' assets. This variable is the ratio between the total nonperforming financing and the total financing provided by Islamic banks. The NPF is a nonperforming financing consisting of financing classified due to the lack of transparency and doubt in repayment. Usually the NPF value is the result of the failure of the debtors to fulfill their obligations. Bank Indonesia stipulated a 5% limit for Islamic banks concerning the NPF value. Technically, the NPF is formulated as follows:

$$\text{NPF} = \frac{\text{Non Performing Financing}}{\text{Total Financing}} \times 100\% \tag{2}$$
